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When Revenue Growth Is Bad

As an entrepreneur, revenue and growth is king.  It’s the holy grail of success.  The more you grow your revenue and customer base, the better.  But growth can be bad…and it can put you out of business if not managed correctly.

Don’t get me wrong, I am a firm believer that you should always grow your business.  If you are not growing, you are stagnant or dying.

But growth for growth’s sake, or too much growth too fast, can be severely detrimental.

Here are 3 reasons why:

  1. Fast growth strains cash flow – the faster you grow, the more resources you need to support that growth.  More people, more inventory, more overhead…and you have to somehow pay for it before your cash comes in the door (see my previous post on your “cash gap”).
  2. Fast growth strains employees – fast growth puts a strain on your people.  Your staff need time to process new customers and orders.  Stressed staff don’t lead to good results.
  3. Fast growth leads to errors – if your processes are not solid, or they don’t scale to your new growth, you risk providing a lower quality product or service to your customers.

Sometimes in business, it’s not revenue growth that is the best measure, but quality of product or service as well as profitability.

If you are growing too fast, recognize it and take steps now to slow it down.  Make sure that you have the right processes and resources in place to support the growth.

Doing so will make a much stronger business and will make you much more money in the long run.

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